Sunday, August 17, 2008

Drilling deep in search of answers

When Congress returns from its recess the Democrats have announced that they are willing to compromise and allow limited offshore oil drilling. This will, among other things, extend the Production Tax Credit (PTC) -- so critical to the development of renewable energy projects -- especially utility-scale wind and solar.

Speaker Nancy Pelosi was quoted yesterday (Saturday) as saying that as part of a bipartisan agreement Congress "will consider opening portions of the Outer Continental Shelf for drilling, with appropriate safeguards."

“A lie can travel halfway around the world,” goes an old saying, “while the truth is still putting on its shoes.”

This maxim is particularly true for hot-button political topics, and there is no hotter button right now than the debate over whether Congress should lift the 27-year-old ban on offshore drilling. I’ve read a lot of news reports and editorials about this issue, and I’ve seen a lot of misinformation – some of it implicit, but a lot of it outright falsehood, too. I hope this post will help clear the air a bit.

Myth #1: We know how much oil there is. Opponents of offshore drilling frequently cite a report by the Department of Energy saying that, according to the Interior Department’s Minerals Management Service, there are “only” about 18 billion barrels of technically recoverable oil in the currently off-limits Pacific, Atlantic, and eastern Gulf regions. (This is different from the recent US Geological Survey report that estimated that there are 90 billion barrels in the Arctic Circle.) Extracting that oil from those regions, the report says, “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.” As a Tuesday editorial in the Washington Post points out, the MMS arrived at those estimates using seismic equipment that is now outdated:

In the case of the Atlantic Ocean, the data were collected before Congress imposed a moratorium on offshore drilling in 1981. In 1987, the MMS estimated that there were 9 billion barrels of oil in the Gulf of Mexico. By 2006, after major advances in seismic technology and deepwater drilling techniques, the MMS resource estimate for that area had ballooned to 45 billion barrels. In short, there could be much more oil under the sea than previously known.

Myth #2:It would be “our” oil. “The American people deserve more access to American oil,” said Rep. Mike Pence (R) of Indiana on the House floor recently. That may be true, but any oil drilled off America’s shores won’t automatically be American oil. It will belong to ExxonMobil. Or Shell. Or BP. Or another multinational company that will be just as free to sell the stuff to China or India as they are to sell it to Americans. Unless we decide to nationalize our oil companies – a notion that, while not opposed by a majority of Americans, has almost no support among our political class – the oil won’t belong to us.

Myth #3: Drilling offshore in the heavily regulated US would prevent more environmentally destructive drilling elsewhere. Conservative columnist Charles Krauthammer put forth this argument a couple weeks back in an op-ed for the Washington Post, in which he criticized House Speaker Nancy Pelosi’s environmentally motiviated opposition to offshore drilling.

Does Pelosi imagine that with so much of America declared off-limits, the planet is less injured as drilling shifts to Kazakhstan and Venezuela and Equatorial Guinea? That Russia will be more environmentally scrupulous than we in drilling in its Arctic?

The net environmental effect of Pelosi’s no-drilling willfulness is negative. Outsourcing U.S. oil production does nothing to lessen worldwide environmental despoliation. It simply exports it to more corrupt, less efficient, more unstable parts of the world — thereby increasing net planetary damage. [Italics in original.]

Does Mr. Krauthammer really believe that, with oil trading at over $100 per barrel, an increase in US production would prompt drillers in Kazakhstan to ease off? The only way that we would really get any significant amount of production to shift from the developing world to the United States would be if it were cheaper to drill here. And that’s not going to happen, partly because of the very environmental regulations that Krauthammer touts, but mostly because the stuff is way down there at the bottom of the ocean.

Myth #4: China is currently drilling off the coast of Florida. “[O]il is being drilled right now 60 miles off the coast of Florida,” said Vice President Dick Cheney in a speech to the US Chamber of Commerce in June. “But we’re not doing it, the Chinese are, in cooperation with the Cuban government. Even the communists have figured out that a good answer to high prices is more supply.”

“China, thanks to a lease issued by Cuba, is drilling for oil just 50 miles off Florida’s coast,” wrote California Rep. George Radanovich in an op-ed for the Modesto (Calif.) Bee.

“Even China recognizes that oil and natural gas is readily available off our shores; thanks to Fidel Castro, they’ve been given a permit to drill for oil 45 miles from the Florida Keys,” wrote House Whip Congressman Roy Blunt (R-Mo.) in another op-ed.

Setting aside the notion that major political figures are holding up the Chinese government as worth emulating, the idea that China is drilling off the coast of Florida is simply not true. As the McClatchy news service reported, China has an agreement with the Cuban government, but only to develop onshore resources. The Chinese have not yet drilled anywhere in Cuba nor off its shores.